Estimated Payments

Re: Estimated Payments

I take it your a 'sole prop' - if that's the case then put aside 5%. When you go to fill out your schedule C or have someone else do it which is the better -
I think it's 4% of the amount over $800? on form SE.

Also get 3 checking accts - one for operating, one for payroll, one for taxes. Also remember that the first 15 days income covers the 2nd part of the month
and the income for the second 15 days cover the first of the next month.

Find also a good accountant that has at least 10 years exp and not a cpa unless you have to have one - do not do it yourself. Make sure you have a chart of accounts with the balance sheet and incomestatement and this accountant does analysis - then you look over this yourself also.

Re: Estimated Payments

Whoa, you must have an impressive(?) accountant!

Most of the soles I know say it's more like 20-26%

Do you do your own taxes and bookkeeping?

Re: Estimated Payments

Although it seems complicated at first glance, estimated quarterly tax payments are not all that difficult to calculate, and the whole process should take no more than an hour or two. To complete the calculations, you will need: last year’s tax return, a calculator, a pen, and piece of paper. There are a couple of ways to calculate how much you owe, and for more details you can download IRS Form 1040-ES, but the details below explain one of the simplest methods.

Discover your average tax rate by pulling out last year’s tax return. To do so, divide your income tax from last year (should be line 43 on an average 1040) by your adjusted gross income from last year (line 37). You then multiply this number by your total income for this quarter. If you are a self-employed individual, you will need to add additional costs for Medicare and social security, usually about 15.5%. For more details on calculating your payment, we highly recommend you seek advice from a professional tax preparer.
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Re: Estimated Payments

If all your taxable income is subject to withholding, and enough tax is being withheld, you will probably not need to make estimated tax payments. If you did not have a tax liability last year, and you do not have any significant changes in the level or source of your income in the current year, your withholding will probably be sufficient to cover your tax liability this year. But if you have a significant increase in your income, or you begin to receive income from sources that are not subject to income tax withholding, you may need to make estimated payments.
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